China’s WISCO Strikes Brazilian Iron Ore Deal

China’s Wuhan Iron & Steel Corporation Limited (WISCO) has signed an agreement with EBX Group Co., Rio de Janeiro, Brazil, that will provide WISCO with access to EBX iron ore while allowing EBX to build a new steelmaking facility.

According to Industrial Info Resources (IIR), Sugar Land, Texas, WISCO will invest $400 million in shares of MMX Co. Ltd., a subsidiary of EBX Group, and will become the secondary shareholder in MMX. WISCO will have the rights to acquire iron ore from MMX on a long-term basis, appoint two directors, and assign three members to a technical commission to participate in MMX’s operations.

In addition, WISCO will set up a joint venture iron and steel plant with EBX Group in Rio de Janeiro, Brazil. According to IIR, WISCO will take control in the joint venture iron and steel plant and be responsible for the future operations of the plant, although WISCO has not disclosed the scale of its investment in the iron and steel plant.

A signing ceremony in early December was reportedly attended by Xiansheng Li, the deputy governor of Hubei Province in China, and Zhijie Zheng, the vice president of the China State Development Bank.

“Successful cooperation on the project is favorable in promoting the friendly exchange between the two countries; in ensuring WISCO’s supply of iron ore resources, in promoting EBX Group’s market value, as well as in promoting the social and economic development in Brazil,” WISCO chairman Qilin Deng was quoted by IIR as saying at the ceremony.

The arrangement fits into pattern of China’s effort to make more favorable arrangements each year during the annual price negotiation for iron ore imported to China.